Question

A professional office center is purchased for $475,000. The land value is 20% of the total acquisition cost. What is the annual IRS depreciation deduction? (Round answer to nearest dollar.)

Answer 1

$9,744

Step-by-step explanation:

In the case of the annual IRS depreciation deduction, the time period for each category assets are different. Like for commercial real estate, the time period is 39 years, for residential real estate, it would be 27.5 years.

The computation is shown below:

= (Purchase value of professional office center × remaining percentage) ÷ (applicable time period)

= ($475,000 × 80%) ÷ (39 years)

= ($380,000) ÷ (39 years)

= $9,744